2025 Employment Law Changes

As we approach April 2025, businesses must prepare for several key employment law changes coming into effect. These updates will impact payroll, employer contributions, statutory payments, and family leave entitlements. Employers must take proactive steps to ensure compliance and mitigate financial and operational challenges.

Key changes and on how businesses can stay ahead.

1. National Minimum Wage Increases – 1 April 2025

The National Minimum Wage (NMW) is set to rise significantly in April 2025, impacting wage costs for many employers. The new rates will be:

• £12.21 per hour for workers aged 21 and over (up from £11.44 per hour)
• £10 per hour for 18 to 20-year-olds (up from £8.60 per hour)
• £7.55 per hour for 16 and 17-year-olds and apprentices (up from £6.40 per hour)

What employers should do:

• Review payroll budgets and plan for increased wage costs
• Ensure payroll systems are updated to reflect the new rates
• Communicate changes to employees and update employment contracts if necessary

2. Employer National Insurance Contributions (NICs) Increase – 6 April 2025

Employer NICs will rise from 13.8% to 15% on employee earnings. Additionally, the earnings threshold for NICs liability will decrease from £9,100 to £5,000 per year, meaning employers will begin paying NICs at a lower earnings level.

What employers should do:

• Assess the financial impact of increased NICs on the business
• Consider workforce planning and cost-saving strategies
• Ensure payroll software reflects the new thresholds and rates

3. Statutory Sick Pay (SSP) Increases – 6 April 2025

SSP will increase to £118.75 per week (up from £116.75 per week). This change affects businesses managing long-term sickness absences and the associated costs.

What employers should do:

• Update internal payroll systems to apply the new SSP rate
• Ensure payroll software reflects the new thresholds and rates
• Provide training for HR teams on handling sickness absence entitlements

4. Tribunal Compensation Limits & Statutory Redundancy Pay Increases – 6 April 2025

New compensation limits for unfair dismissal claims and redundancy pay calculations will be introduced in April 2025. The exact figures are yet to be announced.

What employers should do:

• Monitor announcements regarding new compensation limits
• Review redundancy policies and ensure calculations comply with updated rates
• Train HR teams on potential increased compensation risks in tribunal claims

5. Statutory Family Pay Increases – 6 April 2025

The weekly rates for statutory maternity, paternity, adoption, and shared parental pay will rise to £187.18 per week (up from £184.03 per week).

What employers should do:

• Update payroll systems to accommodate the new statutory pay rates
• Communicate changes to employees taking statutory leave
• Review and revise family-friendly policies if necessary

6. Introduction of Paid Neonatal Care Leave – April 2025

Eligible parents whose babies require specialist neonatal care for at least 7 days within 28 days of birth will be entitled to up to 12 weeks’ statutory neonatal care leave. This leave is a “day one” right and must be taken within 68 weeks of birth.

Parents who have at least 26 weeks of continuous service and earn above the lower earnings limit will also qualify for Statutory Neonatal Care Pay.

What employers should do:

• Look out for official government regulations on how this leave will operate
• Update HR policies to ensure they include neonatal care leave entitlements
• Train managers on handling neonatal care leave requests sensitively and lawfully

These employment law changes require proactive planning to ensure compliance and financial preparedness.

Employers should:

1. Review payroll and financial forecasts to accommodate wage and NICs increases.
2. Update policies and contracts to reflect changes in statutory entitlements.
3. Train HR and payroll teams to manage new regulations effectively.
4. Monitor further government announcements on tribunal compensation and redundancy pay.

By acting now, businesses can avoid last-minute compliance issues and ensure a smooth transition into the new regulatory landscape. Taking these steps will not only protect employers from legal risks but also help maintain positive employee relations in an evolving employment environment.

This is where an up to date Employee handbook is key.

Get in touch with our team today on E: BusinessGroup@allingtonhughes.co.uk

Get in touch with our team today

E: BusinessGroup@allingtonhughes.co.uk

Subscribe to our newsletter on LinkedIn